The Fairness of Sanctions: Some Implications for Optimal Enforcement Policy

Stanford Law School, Olin Law and Economics Working Paper No. 167; and Harvard Law School, Olin Discussion Paper No. 247

18 Pages Posted: 8 Mar 1999

See all articles by A. Mitchell Polinsky

A. Mitchell Polinsky

Stanford Law School; National Bureau of Economic Research (NBER)

Steven Shavell

Harvard Law School; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: September 1998

Abstract

In this article we incorporate notions of the fairness of sanctions into the standard model of public enforcement. We first determine the optimal sanction when the probability of imposing sanctions is fixed, and we relate this optimal sanction to the sanction that is ideal in terms of fairness alone and to the sanction that is ideal in terms of deterrence alone. We then consider optimal enforcement policy when both the probability and magnitude of sanctions may be varied. The usual solution in this case involves the maximal sanction and a relatively low probability of enforcement if individuals are risk neutral. When the issue of fairness is added to the analysis, however, the usual solution generally is not optimal because a very high sanction will be seen as unfair. A consequence of the fairness-related motive to constrain the sanction to a moderate level is that the optimal probability of imposing sanctions changes, and it may be higher or lower than the optimal probability in the usual case.

Note: A revised version of this working paper is forthcoming in the American Law and Economics Review.

JEL Classification: D74, D79

Suggested Citation

Polinsky, A. Mitchell and Shavell, Steven, The Fairness of Sanctions: Some Implications for Optimal Enforcement Policy (September 1998). Stanford Law School, Olin Law and Economics Working Paper No. 167; and Harvard Law School, Olin Discussion Paper No. 247. Available at SSRN: https://ssrn.com/abstract=150554 or http://dx.doi.org/10.2139/ssrn.150554

A. Mitchell Polinsky (Contact Author)

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Steven Shavell

Harvard Law School ( email )

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